Final answer:
Adjusting accrual entries impact both the balance sheet and income statement by correctly recognizing revenues and expenses in the correct accounting period.
Step-by-step explanation:
Adjusting accrual entries are made to ensure that revenues and expenses are recognized in the correct accounting period, even if the cash has not been received or paid yet. These entries impact both the balance sheet and the income statement.
On the balance sheet, adjusting accrual entries affect the asset and liability accounts. For example, if an expense is recognized but not yet paid, it will increase the liability account (e.g., Accounts Payable). On the income statement, adjusting accrual entries impact the revenue and expense accounts, improving the accuracy of the financial statements.
Overall, the purpose of adjusting accrual entries is to reflect the revenue and expenses accurately, thereby providing a more realistic view of the financial position and performance of the company.